SecProbe.io

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

Amendment No. 2

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-29391

VIA NET.WORKS, INC.

(Exact name of registrant as specified in its charter)

Delaware

84-1412512

(State or other jurisdiction)

(I.R.S. Employer Identification No.)

H. Walaardt Sacrestraat 401-403

1117 BM Schiphol

The Netherlands

(Address of principal executive offices)

Registrant’s telephone number, including area code: +31 20 502 0000

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is: an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 20, 2005, there were outstanding 56,053,988 shares of the registrant’s common stock and 5,050,000 shares of the registrant’s non-voting common stock.

EXPLANATORY NOTE

This Form 10-Q/A for the quarter ended March 31, 2005 is filed solely for the purpose of amending Part I Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”, Part I Item 4 “Controls and Procedures” and Part II Item 6 “Exhibits and Reports on Form 8-K” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, filed with the SEC on May 20, 2005 (the “First Quarter 10-Q”) in response to comments received from the Securities and Exchange Commission. No change is otherwise made to Part I or Part II of the First Quarter 10-Q. This Form 10-Q/A speaks as of the original filing date and has not been otherwise updated to reflect events occurring subsequent to the original filing date.

VIA NET.WORKS, INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements:

Condensed Consolidated Balance Sheets as of December 31, 2004 and March 31, 2005

Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 and

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

Item 2.

Changes in Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Submission of Matters to a Vote of Security Holders

Item 5.

Other Information

Item 6.

Exhibits and Reports on Form 8-K

SIGNATURES

EXHIBIT INDEX

302 CERTIFICATIONS

PART I

ITEM 1. FINANCIAL STATEMENTS

VIA NET.WORKS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share data)

December 31,

March 31,

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$

15,497

$

7,797

Restricted cash

5,100

4,055

Trade and other accounts receivable, net of allowance of $2,966 and $3,203 respectively

13,909

11,666

Other current assets

6,972

6,596

Total current assets

41,478

30,114

Property and equipment, net

13,065

11,146

Goodwill

42,466

40,594

Intangible assets, net

8,695

7,038

Other non-current assets

Deferred tax asset

14,305

14,326

Assets of businesses held for sale (Note 2)

—

3,026

Total assets

$

120,453

$

106,747

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

16,899

$

16,556

VAT and other taxes payable

1,083

Current portion of capital lease obligations and long-term payables

9,325

8,811

Deferred revenue

15,591

12,965

Accrued expenses

24,451

21,709

Deferred tax liability

13,772

14,515

Other current liabilities

3,744

3,152

Total current liabilities

84,865

78,418

Capital lease obligations and long-term payables, less current portion

Deferred tax liability

2,639

1,753

Liabilities of businesses held for sale (Note 2)

—

2,803

Total liabilities

87,848

83,230

Commitments and contingencies (Note 11)

Stockholders’ equity:

Preferred stock, $.001 par value; 10,000,000 shares authorized; no shares issued

—

—

Common stock, $.001 par value; 132,500,000 shares authorized; 62,624,777 and 62,624,777 shares issued, respectively

Additional paid-in capital

557,907

557,907

Treasury stock, 1,520,789 shares

(1,521

)

(1,521

)

Accumulated deficit

(488,880

)

(500,296

)

Accumulated other comprehensive loss

(34,964

)

(32,636

)

Total stockholders’ equity

32,605

23,517

Total liabilities and stockholders’ equity

$

120,453

$

106,747

The accompanying notes are an integral part of these condensed consolidated financial statements.

VIA NET.WORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands of U.S. dollars, except share and per share data)

(Unaudited)

For the three months ended

March 31,

Revenue

$

10,396

$

24,089

Operating costs and expenses:

Internet services

5,346

12,189

Selling, general and administrative

13,264

19,460

Impairment and restructuring charges

3,453

Depreciation and amortization

1,838

2,114

Total operating costs and expenses

20,748

37,216

Operating loss from continuing operations

(10,352

)

(13,127

)

Interest income

Interest expense

(18

)

(172

)

Other income, net

Foreign currency losses, net

(3,326

)

(1,702

)

Loss from continuing operations before income taxes

(13,556

)

(14,585

)

Income tax benefit (expense)

(30

)

Net loss from continuing operations

(13,549

)

(14,615

)

Discontinued operations:

Gain (loss) from discontinued operations

3,732

(24

)

Gain on disposal of discontinued operations

—

3,223

Net loss

$

(9,817

)

$

(11,416

)

Basic and diluted loss per share:

Continuing operations

$

(0.22

)

$

(0.24

)

Discontinued operations

0.06

0.05

Net loss per share—basic and diluted

$

(0.16

)

$

(0.19

)

Shares used in computing basic and diluted loss per share

60,708,602

61,103,988

The accompanying notes are an integral part of these condensed consolidated financial statements.

VIA NET.WORKS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of U.S. dollars)

(Unaudited)

For the three months ended

March 31,

Cash flows from operating activities:

Net loss from continuing operations

$

(13,549

)

$

(11,416

)

Adjustments to reconcile net loss from continuing operations to net cash used in operating activities:

Depreciation and amortization

1,838

2,114

Impairment charges

—

2,367

Provision for doubtful accounts receivable

Unrealized foreign currency transaction losses

2,510

1,674

Deferred tax

Stock compensation

—

Changes in assets and liabilities, net of acquisitions:

Trade accounts receivable

(517

)

(1,943

)

Other current assets

(398

)

1,059

Other non-current assets

(2

)

—

Accounts payable

(967

)

VAT and other taxes payable

(242

)

Accrued expenses

1,634

(1,487

)

Other current liabilities

1,139

Deferred revenue

(16

)

Net cash used in operating activities by discontinued operations

(994

)

(1,759

)

Net cash used in operating activities

(8,759

)

(7,031

)

Cash flows from investing activities:

(Increase) decrease in restricted cash

(51

)

1,045

Acquisition of subsidiaries (net of cash acquired)

(7,735

)

(1,317

)

Purchases of property, equipment and other assets

(1,658

)

(1,044

)

Proceeds from disposition of subsidiaries

—

1,344

Net cash used in investing activities by discontinued operations

(241

)

(19

)

Net cash used in investing activities

(9,685

)

Cash flows from financing activities:

Repayment of debt and principal payments on capital lease obligations

(48

)

(541

)

Proceeds from issuance of common stock, net

—

Net cash used in financing activities by discontinued operations

(2

)

—

Net cash (used in) received from financing activities

(541

)

Effect of currency exchange rate changes on cash

(679

)

(137

)

Net decrease in cash and cash equivalents

(18,862

)

(7,700

)

Cash and cash equivalents, beginning of period

65,803

15,497

Cash and cash equivalents, end of period

$

46,941

$

7,797

The accompanying notes are an integral part of these condensed consolidated financial statements.

VIA NET.WORKS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

These condensed consolidated financial statements as of March 31, 2005 and for the three month periods ended March 31, 2004 and 2005 and the related footnote information are unaudited and have been prepared on a basis substantially consistent with the audited consolidated financial statements of VIA NET.WORKS, Inc. (“VIA” or “the Company”) as of and for the year ended December 31, 2004, included in VIA’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“2004 Annual Report”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes to the financial statements included in the 2004 Annual Report. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) that management considers necessary to present fairly the consolidated financial position of VIA at March 31, 2005 and the results of its operations and its cash flows for the three month periods ended March 31, 2004 and 2005. The results of operations for the three-month period ended March 31, 2005 may not be indicative of the results expected for any succeeding quarter or for the year ending December 31, 2005. Certain prior period amounts have been reclassified to conform to the current period presentation. Reclassifications have been made to prior period amounts to account for discontinued operations.

The preparation of financial statements in conformity with generally accepted accounting principles requires VIA to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, together with amounts disclosed in the related notes to the consolidated financial statements. Actual results could differ from the recorded estimates.

Going concern:

For the three months ended March 31, 2005, the Company had net losses from continuing operations of $14.6 million and net decrease of cash and cash equivalents for the period of $7.7 million.

As of March 31, 2005, the Company had $7.8 million in cash and cash equivalents and $4.1 million in restricted cash.

On March 17, 2005, the Company announced that a combination of factors including unanticipated revenue shortfalls in certain of its legacy VIA companies and its new VIA Express business would leave the Company with insufficient cash reserves to continue the operations of the group parent, VIA NET.WORKS, Inc., in early April 2005, and that it was working with its professional advisors to obtain new financing to address the issue. With the support of its advisors, the Company pursued two parallel processes to maximize its strategic alternatives and optimize the value that is inherent in the VIA businesses. In the first of the processes, the Company engaged in discussions with a number of parties with a view to selling all or parts of its businesses. In the second of the two processes, the Company sought potential investors to provide funds sufficient to enable the Company to continue as a going concern.

On April 1, 2005, the Company announced the sale of two of its Swiss companies—VIA NET.WORKS (Schweiz) AG and VIA NET.WORKS Services AG—to former managers and owners of the business, for a purchase price of CHF 3.5 million ($3.1 million). The net proceeds of the sale provided VIA with additional liquidity to continue its discussions for refinancing and sale transactions.

On April 30, 2005, VIA NET.WORKS, Inc. entered into a sale and purchase agreement, or Sale Agreement, with Claranet Group Limited (Claranet), a privately-held European Internet services provider based in the United Kingdom, to sell all of the Company’s remaining business operations in Europe and the United States (the Asset Sale). The agreement followed on the letter of intent entered into between Claranet and VIA on April 10, 2005. The following discussion is a summary of the material provisions of the Sale Agreement. This summary is qualified in its entirety by reference to the Sale Agreement, a copy of which is attached as Exhibit 99.1 to the Current Report on Form 8-K filed by VIA on May 3, 2005 with the Securities and Exchange Commission reporting the execution of the sale and purchase agreement.

The material provisions of the Sale Agreement are as follows:

Assets to be Sold Pursuant to the Sale Agreement

· VIA would sell to Claranet all of its business operations in Europe and the U.S, which includes all of our subsidiary companies other than VIA NET.WORKS NY Corp, VIA NET.WORKS Holdco, Inc., Surftrade U.S.A. Inc. and our parent company, VIA NET.WORKS, Inc. The assets to be sold to Claranet consist of substantially all of the Company’s assets, properties and rights. Claranet would acquire certain assets and liabilities pertaining to the Company’s centralized back office financial and technical support systems that are owned by the Company’s group parent company, VIA NET.WORKS, Inc. The Company would transfer employment contracts of certain headquarters personnel who are responsible for supporting the back office and technical support systems to appropriate VIA operating companies or Claranet will offer employment to such persons.

Treatment of Liabilities

· Claranet would assume certain liabilities of our parent company, VIA NET.WORKS, Inc., including liabilities and obligations relating to the business operations being sold and employee contracts of certain headquarters personnel. Claranet would not assume other liabilities, such as severance costs for other employees at the corporate headquarters, lease payments, outstanding liabilities from previous acquisitions, vendor bills relating to cost